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Starbucks Case Analysis

2.
What factors accounted for the extraordinary success of Starbucks in the early 1990s? What was so
compelling about the Starbucks Value Proposition? What brand image did Starbucks develop during
this period?
Factors that contributed to Starbucks’ success:
• Experiential branding strategy
• Reach
• Product variety
• Customer service
• High Quality Coffee
• Starbucks ‘ transformed coffee consumption from a picking behavior to an experience with high
credence attribute
Starbucks’ Value Proposition:
1. To create an “experience” around the consumption of coffee, an experience that people
would weave into their lives
2. To create an uplifting experience in “Customer intimacy”
3. To create an “ambience” based on human spirit, sense of community, and the need for
people to come together
Starbucks’ Brand Image:
Anywhere, everywhere, good coffee on the run captures Starbucks image completely.
Why has Starbucks CSI scores declined? Has it really declined or is it simply measuring the CSI the
wrong way?
As per the Service quality and customer satisfaction model, CSI can be measured in terms of following
parameters:

3.
Customer satisfaction gap could primarily be attributed to a service gap between Starbucks scores on
key attributes and customer expectations.
As per above model, Starbucks is measuring customer satisfaction parameters which really do not fall
into CSI measurement category. Starbucks is measuring parameters that attribute to product quality
rather than service quality.
Thus, Starbucks is measuring CSI in wrong way.
Describe the ideal Starbucks customer from a profitability standpoint. What would ensure that this
customer is highly satisfied? How valuable is a highly satisfied customer to Starbucks?
For Starbucks, a loyal represents a profitable investment. Starbucks wants customers to return to the
store and spend time so as to ensure more consumption. To ensure customer loyalty, Starbucks needs
to focus on Interaction quality, physical environment quality and outcome quality.

4.
Qualitatively every customer is invaluable to Starbucks. But if we want to ascertain a quantitative
measure to satisfaction, value from a customer can be measured from Exhibit 9 as follows:
Value from customer = Number of Starbucks visits/month * Average customer life * Average ticket size
= 4.3 *4.4 *12* 4.06
= 921.7824
Should Starbucks make the $40 million investment in labor in the stores? Is it possible for a mega‐
brand to deliver customer intimacy?
Starbucks can come out with following plan of action as outlined below:
1. Proceed with investing the $40 million annually in the 4,500 stores to increase service efficiency
(impacting customer satisfaction. Goal ~ customer retention in the competitive coffee house
market)
2. While the investment enables additional labor hours, research efforts to increase efficiency
through set‐up and equipment (e.g. automated espresso machine, specialized work stations)
3. Use secondary market research data to identify, analyze, and alter product differentiation
strategies, with respect to smaller chains and Starbucks obliquities
4. Alter the product mix depending on the store size and location of the outlet (demographics)
Sample to find out what customers mainly look for
•
Sample data results would narrow the customization and train baristas with
•
those special concoctions
5. Marketing Research showing that existing markets are far from saturation
6. Continue with Product and Service innovation, proactively conduct an environmental scan to
launch new products
7. Validate Market Research metrics and methods of sampling, data analysis
Service Performance categories
•
Starbucks needs to find out whether the data translates in to measurable
•
metrics that can impact sales and profitability.